The Goods and Services Tax Appellate Tribunal (GSTAT), Chennai Bench, has held that a dispute concerning the application of blocked input tax credit provisions to advertisement expenses, business promotional expenses, air travel and accommodation services involves a question of law and must be heard by a Division Bench comprising one Judicial Member and one Technical Member.

The Bench of Praveen Kumar Jain (Judicial Member) and Shaik Khader Rahman (Technical Member) considered the preliminary issue of whether the appeal involved a question of law requiring adjudication by a Division Bench. It did not decide whether the disputed credits should ultimately be allowed or denied.

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The appeal concerns whether input tax credit on advertisement expenses, business promotional expenses, air travel and accommodation services is legally permissible in light of Section 17(5) of the Central Goods and Services Tax Act, 2017.

The company’s authorised representative filed written submissions on October 6, 2026, stating that the appeal involved a question of law. The submissions also framed possible questions of law for consideration.

The department in its written submissions dated October 5, 2026, similarly stated that the challenge to the applicability of Section 17(5) of the CGST/SGST Act, 2017, involved a question of law. Both sides therefore agreed on the legal character of the dispute. 

The Tribunal observed that the CGST Act does not define the expression “question of law”. It explained that a question of law arises where the dispute requires interpretation of legal principles, statutory provisions or judicial precedents.

According to the Bench, determining whether an appeal involves such a question must be based on the memorandum of appeal and the written submissions filed by the parties.

Applying this approach, the Tribunal found that the dispute required consideration of whether the availment of ITC affected by Section 17(5) was legally permissible. It also took into account the acknowledgment by both authorised representatives that a question of law arose in the appeal.

The Bench consequently held that the matter involved a question of law within the meaning of Section 109(8) of the CGST Act, 2017, and directed that the appeal be heard jointly by one Judicial Member and one Technical Member. 

The Tribunal directed that Appeal be listed on November 30, 2026, for a hearing on merits before the appropriate Bench.

The order settles the composition of the Bench that will hear the dispute. It does not establish that advertisement, promotional, air travel or accommodation expenses are automatically eligible for ITC, nor does it hold that all such expenses fall within the blocked credit provisions.

The substantive question—whether the credits claimed by the company are barred under Section 17(5)—remains open for adjudication at the hearing on merits. 

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